Bank will expand exposures on lower-rated, unsecured segment with proper due-diligence: AK Goel, MD & CEO, Uco Bank

By: |
September 10, 2021 2:45 AM

PCA had not put restrictions on lending to big ticket size loan, except some restriction on low rated customers, unsecured loans, exposure in non-fund based business.

AK Goel, managing director & chief executive officer, Uco BankAK Goel, managing director & chief executive officer, Uco Bank

As the Reserve Bank of India (RBI) has decided to take Uco Bank out of the prompt corrective action (PCA) restrictions, the bank will now take exposure in non-fund business to boost its non-interest income and expand exposures on lower rated, unsecured segment with proper due-diligence, says its MD & CEO AK Goel. In an interview with Mithun Dasgupta, Goel informs the lender will look for expanding its branch network in the areas where it has low presence but growth potential is more. Excerpts:

As the Reserve Bank of India (RBI) has lifted Prompt Corrective Action (PCA) restrictions on Uco Bank, will it help the bank grow its business faster?
Yes, Uco Bank can now go on non-fund business which attracts low capital and help in improving the bank’s non-interest income. It can now lend to borrowers which are highly rated but unsecured by keeping in mind the trade-off between risk and return.

Will the Bank now be able to disburse higher ticket size loans?
PCA had not put restrictions on lending to big ticket size loan, except some restriction on low rated customers, unsecured loans, exposure in non-fund based business. During the PCA restriction bank was cautious on lending to big ticket size except highly-rated and lending to this segment was restricted to AAA/AA , central/state government guaranteed loans, PSUs, customer with very high market reputations, etc.

What are the strategies to be taken going ahead for higher growth?
Even after removable of PCA restriction, the bank will be cautious in lending to risky sectors/customers. It will expand exposures on lower rated, unsecured segment with proper due-diligence and also factoring the trade-off between risk and return. The bank will take exposure in non-fund business to boost its non-interest income. It will continue to put more thrust on lending to retail, MSME, agriculture and better quality corporate customers to meet its higher growth requirements.

Will now Uco Bank plan to expand its branch network?
Yes, one of the restrictions under PCA was not to expand its branch network. Upon removable of restriction, the bank will look for expanding its branch network in the areas where it has low presence but growth potential is more.

At the end of the first quarter this fiscal, gross NPA ratio stood at 9.37%, while net NPA ratio was at 3.85%. Does the bank have any target on bringing down the NPAs further by this fiscal end?
The bank has strengthened its credit monitoring and recovery mechanism to arrest further slippages to NPA category and improve recovery from non-performing accounts.

These all efforts resulted that its net NPA ratio remained below 4% in June, 2021. We expect that the bank gross NPA ratio should come down below 8% and net NPA ratio at around 3% by this fiscal end.

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